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Korea is the fifth largest importer of crude oil and the ninth largest consumer of petroleum products in the world. Moreover, petroleum occupies nearly half of the nation’s primary energy consumption.

Because of this level of oil consumption, it is a very important national task to secure a stable supply of petroleum in order to continue to achieve sustained economic growth in the future.

In particular, Korea experienced serious economic difficulties at the time of the first and second oil crises which took place respectively in 1973 and 1979. In order not to repeat such bitter experiences, Korea embarked on petroleum stockpiling projects amidst the second oil crisis.

To this end, the government inaugurated the state-run Korea National Oil Corporation(KNOC) in 1979 with the two major goals of taking charge of the oil stockpiling business for emergencies and participating in oil exploration and development projects as a long-term measure to secure a stable supply of crude oil.

As a result of the continued expansion of storage facilities, the KNOC is now possessing a storage capacity of 138 million barrels as of the May of 2009. However, the government is pushing ahead with its plan to further expand the KNOC’s storage facilities and thus increase the state-owned petroleum stockpile for emergencies.

In 1992, the government revised partially the petroleum business law to impose an oil stockpiling obligation on the private sector. From 1993, the government has been posting mandatory stockpiling quotas on oil refiners and independent oil importers every year.

The obligatory stockpile volume for oil refiners and independent importers was set at a 40-day and 30-day supply level based on the previous year’s domestic sales volumes respectively.

As an action to heighten the ability to cope with the crisis in petroleum supply, an associated effort for international petroleum stockpile has been made since 1999. This is a project to invite and store crude oil and petroleum products of oil producing nations in reserve storing facilities of the KNOC.